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Top 52. Nov 4, 2001 3:30 PM

» Kirk - Post Recession Data

Nice summary of the data:

To:Jacob Snyder who wrote (55051)
From: Paul V. Sunday, Nov 4, 2001 3:50 PM
Respond to of 55066

Jacob, Just read the S&P Outlook. They looked at the last nine recessions and found that after the lows the run up was 38% in 6 months and 48% in 12 months. At the time of the publication a week ago the Outlook stated that the S & P was up 14%. The article supported my DW data which showed the low was reached on September 21. The Sector DW data showed an average of 22% on 9/21/01 and then has moved upward to 40% at the end of the day Friday, 11/2/01. If we add the 38% average for S&P to the 22% of the DW sector average we get a high average of the DW sector 60% in six months or an additional average of 20% from here. The S&P article stated that they expect the 38% high gain to be reached in Feb. 2002 and a final high of of 46% gain not occurring until the end of the year 2002. This gives us only an 8% gain from Feb. to the end of the year. With the January effect, simulation package and low interest rates coming into play they may be right.

In the back of my mind I keep the references: (1) to follow the FED, (2)the book by Harry Dent entitled, Roaring 2000, (3) Maestro by Bob Woodward, (4) the impact of the baby boomers, (5 ) the President cycle coming into play in 2003 and 2004 and (6) CEO Morgan, a couple of years ago saying that equipment highs will be reached in 2006.

The trend appears to be our trend. It appears that we still have some upward movement. Tito has a better grasp on Amat possibilities than I.

Just my opinions.

Paul

-- posted by Kirk

Top 53. Nov 5, 2001 9:58 PM

» RevengeNow - Irrational Anticipation?

The stock market's behavior over the past week or so seems irrational to me. It anticipates an economic recovery that, to date, that has yet to send any advanced signals. Who can get really excited about Cisco's reported quarterly EPS of $0.04, even if said report is free of any creative accounting? Cisco's corresponding PE ratio is then still above 100! If this is a bellwether indicator, I think that the market is ripe for another big tumble. Comments?

-- posted by RevengeNow

Top 54. Nov 5, 2001 10:33 PM

» way2go - unemployment #

I remember reading that if unemployment rose above 5%- sell and run for it--- well we are there and the market went up??

-- posted by way2go

Top 55. Nov 6, 2001 11:27 AM

» SteveT - 1/2 point cut

CNN is reporting a .5% cut by the FED.

-- posted by SteveT

Top 56. Nov 6, 2001 12:58 PM

» lcha - Re: 1/2 point cut

In response to message posted by SteveT:

1/2 point rate cut

Another knife stuck in the backs of all the retired folks living off their fixed income investments. It will be dog food time for some of these folks.

-- posted by lcha

Top 57. Nov 6, 2001 2:10 PM

» Bernie777 - QQQ's

Is is too late to get into QQQ's. I was too scared when they were 29, now at 41 I'm getting some courage. Of course reading some previous posts there is the fear of another market tumble. I do not have the stomach to ride those cubes down again.

-- posted by Bernie777

Top 58. Nov 6, 2001 3:50 PM

» Kirk - Re: QQQ's

In response to message posted by Bernie777:

I do not have the stomach to ride those cubes down again.

then you should consider getting out of the day trading business and get an asset allocation that you can live with no matter what the market does.

Anyone that encouraged you to day/week/month trade QQQs should be avoided like an envelope full of white powder.

If you exited the QQQs at $29, then I thank you for the capitulation as it took many to be scared out to make a bottom and maybe you can claim some pride in helping the market bottom? smile

To buy back in now and then if they test the recent bottom, then I bet you would get whip-sawed right out once again.

After what you have just experienced, do you NOW have any idea why I try to discourage market timing? It is amazing that you would even ask a message board for help predicting the future. How well did your last prediction from the person that got you into QQQs go? Why trust anyone else to be any better?

-- posted by Kirk

Top 59. Nov 7, 2001 4:57 PM

» smile_1 - Investor sentiment, outflows point to trouble

Writing on the wall for stocks

Investor sentiment, outflows point to trouble

By Thom Calandra, CBS MarketWatch
Last Update: 1:59 PM ET Nov 7, 2001

SAN FRANCISCO (CBS.MW) -- Those tracking the stock market's October-November rebound fully expect equity indexes to give up gains in coming months.

"I'm the first one to admit I have no crystal ball, so I tend to look for areas of high risk," says David Solin at Foreign Exchange Analytics in Connecticut. "There is a huge expectation being built in that earnings are going to bounce back pretty sharply, but even on the tech side, these stocks are still way overvalued, trading at huge multiples."

Those profit multiples range from 26 or so for your average Standard & Poor's 500 company to 60 and greater for the Nasdaq 100 (QQQ) crowd. "You have a huge jump in price-earnings multiples, well you expect to see a huge jump in profits, and with that a jump in sales. But many companies, like Cisco (CSCO), are actually seeing flat or falling sales. There is a lot of risk here."

Solin, who sends out his technical views to clients each day, sees the Nasdaq Composite in the next seven months dropping below the September low of 1,387, perhaps to 1,315. The index trades now at 1,846 after a four-week rally that is beginning to entice American investors, many of them sitting on 50 percent and greater losses in this, the 19th month of the continuing bear market.

Solin and others believe few individuals have benefited from the autumn rally. Just 39 stocks with market capitalizations above $250 million have gained 40 percent or more in the past three months, a new survey shows.

Research firm Lipper Inc. says 93 percent of domestic mutual stock funds are in the red this year, providing further evidence that American investors are suffering their worst year in more than a decade.

"I highly doubt there was any significant new money put to work in the past month or so," says Solin. "You still have a lot of people long tech stocks for instance, but not averaging down. The market has a wonderful ability to crush as many people as it can."

Indeed, there is little evidence that equity fund outflows have subsided, even during the rebound from the Sept. 11 terrorist attacks. "Investors have pulled money from stock funds during nine of the past 10 weeks," says Tim Villano of Aquila Advisors Inc., also in Connecticut. That outflow of money is bound to increase this month as investors send money to bond funds that have soared after the U.S. Treasury's decision to scrap new issues of the 30-year government bond.

Follow the bouncing beta

Villano regularly scans charts linked to stock-market volumes and investor sentiment indicators such as put-call options gauges. He also examines volatility indexes such as the CBOE Market Volatility Index (VIX), which measures fear or complacency.

"We had one week of intense fear after Sept. 11, but it is unlikely that one week of a definitive bearish sentiment is what will mark the bottom of a down market," he says. "One week is not enough to put in bull market lows, yet alone bear market lows. The CBOE Volatility Index this week dropped below 30 for the first time since Sept. 5, suggesting that investors are on pain killers, accepting rising stock prices with goofy grins and drooping eyelids.

"One sure sign we're still in a bubble is that every rally is into the pure crap," says Cliff Asness of AQR Capital in New York City. "People are still looking for lottery tickets, not investments. That's scary."

As an example, Asness graphs a rolling 24-month market sensitivity for a portfolio of stocks held long and short. The model buys those stocks with the highest Wall St. expected 5-year growth rates and short-sells, or bets against, the lowest. The model, like some hedge funds, is designed to be market-neutral.

To be sure, the biggest gainers in the portfolios have been those companies with very high expected growth rates. These are stocks, in the current rally, such as Brocade Communications (BRCD), Juniper Networks (JNPR), Cisco and even Sun Microsystems (SUNW).

Unfortunately, those companies are also "a) the super expensive stocks, and b) evidence is very strong that Wall Street growth forecasts historically don't come close to coming true," Asness says.

The model portfolio's beta, which is how the stocks track the overall market, is designed to be zero. In essence, zero beta means the portfolio's return, which may be substantial in either direction, is on average unrelated to the market's direction. Instead, the past two years have sent the beta as high as 0.5, its current level. "In non-geek terms, for the last two years, every rally has been an abnormally insane growth-tech rally and every trade-off the opposite," says Asness, who with his partners manages a portfolio worth $1.4 billion and is a frequent contributor to financial journals.

As some technicians point out, bear-market counter rallies can linger for weeks, or months. "So far, this rally hasn't been anything special," says Villano, who writes a regular report for his Aquila Advisor clients.

What's needed is some historical perspective. "A major secular bull-market end doesn't happen too often. We saw it in 1920 to '29, '42 to '66 and '82 to 2000," Villano says. "This ending hasn't run its course."

The view from this corner? Those high-octane stocks will pay a return visit to lows they reached just after Sept. 11. But not before desperate investors, kvetching on the sidelines with as much as $2.3 trillion of money-market cash, play craps at the market's lofty levels.

-- posted by smile_1

Top 60. Nov 7, 2001 6:55 PM

» stocksystm - Market's Scary Course

Witnessing the continued reduction in short term interest rates one gets the feeling Greenspan is trying to force people into equities and, at the same time, stave off a deflationary collapse. I consider the recent market rally a gift which will allow us speculators on margin a last chance to get out before the final capitulation. Greenspan's efforts to save his legacy have a fairly good chance of failing due to an overabundance of leverage in the economy.

I would like to respond to a previous poster's observation that services seem to be inflating in price. It is due to a lack of competition that services like health care and utilities are going up in price. Anything that can be provided by 3rd world countries and their incredibly cheap labor is going to continue falling in price.

-- posted by stocksystm